Prepare a pension worksheet for the pension plan

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Question - On January 1, 2013, Laura's Living Company has the following defined benefit pension plan balances.

Projected benefit obligation

$6,400,000

Fair value of plan assets

6,900,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2014, the company amends its pension agreement so that service costs of $335,000 are created. Other data related to the pension plan are as follows.


2013

2014

Service costs 

$180,000

$190,000

Prior service costs amortization 

$0

$86,000

Contributions (funding) to the plan

$200,000

$206,000

Benefits paid

$185,000

$215,000

Actual return on plan assets 

$621,000

$654,000

Expected rate of return on assets

9%

10%

Required:

(a) Prepare a pension worksheet for the pension plan for 2013 and 2014.

(b) For 2014, prepare the journal entry to record pension-related amounts.

Reference no: EM131837102

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